We’re thrilled to be back with another Real Estate post today. Last time we checked in with this topic, we looked at the future of the real estate market and the market cycle. If you missed it, you’ll want to make sure to catch up, as it will help you understand this post a little better.
If you’re in the market now or will be in the future, we want to provide you with valuable information for navigating the real estate market so we can help you make that next purchase.
But first, let’s keep all the legal guys and gals happy. The purpose of this series is to explore the housing market and what I believe we can expect from it. Please understand we’re not offering personal financial advice. We highly encourage you to talk to your local Realtor and licensed financial adviser. {Side note: If you need help finding a good local Realtor, let us know no matter where you live. We have helped several people with this not-so-little task.}
So, with that out of the way, let’s jump into our three predictions, a trend, and a warning for 2024.
• The FED is The Gas That Feeds The Engine.
As we talked about last time, I believe we are in the trough part of the cycle, looking ahead to the expansion phase. What I’ve speculated for months is continuing to play out, which makes me feel even more confident about where we’re headed.
1. My First Prediction for 2024: We’ll see a minimum of a 125 basis point rate cut to a max of 200 basis point rate cut.
The FED has paused its rate hiking campaign, and most market watchers believe, after the FED hinted at its last meeting, we will begin seeing rate cuts as early as the second Quarter of this year, if not before. Some market watchers believe as early as March.
The possibility of rate cuts is very important to potential homebuyers and sellers. As we have discussed for over a year, people believe that interest rates are insanely high, but if you have followed along, I have said time and again, that historically they have hovered around the average interest rates dating back to the 1960’s. However, data and truth have little place in the minds of emotional home buyers and that is a very important thing to remember.
Would-be buyers and sellers have stayed on the sideline waiting to see how high rates would go, and are now waking up from their winter slumber eager for that first rate cut. As soon as the FED begins cutting, they will come back to the market eager to find their home and as the FED continues to cut rates through 2024, followed by the buying hitting its stride as people live in a euphoria of “cheaper” rates.
2. My Second Prediction for 2024: Existing home sales will stay low.
Again if you have followed along, data shows there are upwards of 80+% of homeowners with a sub-4 % mortgage rate. With rates still currently sitting around 6.15%. At best, we are looking to only drop to 4.15% but, more realistically, 4.75-5%, which removes a large portion of homeowners from having that itch to sell without a life-changing event.
Since only existing homeowners with life changes (i.e. new jobs, larger families, downsizing, death, etc.) will be looking to move, this will drastically reduce the number of existing homes that will come to market. This means competition will be high for those homes, which will drive higher existing home prices.
3 My Third Prediction for 2024: There will NOT be a housing market crash in 2024.
I’ve said since 2021 that I do not believe or see evidence for a housing market crash. I stand by that as my third prediction for 2024. As we discussed last time, I predict we will see an increase in home prices as we go through 2024 into 2025. This belief is centered around 3 key points.
First, as discussed above, existing home sales will be low.
Second, new home builds will not meet demand. They have been lagging behind demand since the housing crisis of 2008 and nothing has changed. In fact, with the rate hikes, home building slowed even more.
Third, the FED will lower the FED funds rate in 2024, creating more favorable mortgage rates, which will lead to consumer confidence and bring more home buyers to the market.
When demand is high and supply is low, prices rise.
check out our original basement renovation post, here.
• 2024 Housing Trend: Older Homes.
Trends in real estate are not the same as trends in the design world. Trends in this sense, are where is the data leading us? My trend for 2024 will be the desire for older homes to be renovated.
Interest rates will come down some but as we mentioned, existing home sales will be low. Home prices will rise, meaning the price of new homes will outpace the price of existing homes to begin with. This will change as the market ramps up as we move further into 2024.
People will find it more cost-effective to buy an existing home and renovate it as opposed to going all in on a new home that looks just like Doug and Sally’s down the street. This, coupled with the trend we are seeing across fashion and other areas of a throwback to past styles, will lead to many new home buyers looking for older homes as their preferred choice to credit some identity and individuality in their lives, as well as spend less upfront to update as they go.
• Warning for 2024: Be Ready.
All things tie together if you take the time to step back and follow the data, psychology, and logical pattern.
This leads me to my warning for 2024. If you’re interested in buying over the next year, be ready and take action sooner rather than later. As I said last time, we are not near the peak of this housing market cycle, and when it takes off again, it is going to leave a lot of people in the dust. Prices will rise over the next 24-30 months before we see a crash back to just above the current market value. You don’t want to be caught buying at the top of the market and worrying about going red on your investment.
Let me put it more clearly. Get those ducks in a row now, because we will not see housing prices this cheap ever again. Get pre-approved for that loan, get the financials in order, hire that Real Estate agent, and know where and what you’re looking for. If you thought 2020-21 was a ride, well, heed my warning and buckle up, butter cup.
If you are thinking about buying a home, mentally prepare yourself now. You can start by understanding the home-buying process or reading any of our other posts on real estate.
The big takeaway is that this market will heat up again and do so seemingly overnight, prices will rise and existing homes will become harder to find. Take action before the masses do and ride the real estate market up.
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Real Estate is an interesting beast, and having an agent who can pull the curtains back and help navigate what will most likely be the biggest purchase of your life, is essential. As they say, you don’t know what you don’t know, and that’s where a good realtor comes in. {If you need help in hiring a Realtor, check out our post here.}
If you’re in the Middle Tennessee area, I’d love to meet you and help you find the perfect home, you can sign up here so we can start the process. And even if you aren’t in Middle Tennessee, contact us here and we will take care of you no matter where you live. There is no reason to go it alone.
Have an inspired day!
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